3D printing service provider Shapeways (Nasdaq: SHPW) is facing potential bankruptcy. A $5 million rescue was rejected by Shapeways, according to a person familiar with the situation.
UPDATE: Shapeways bankruptcy is confirmed, executive team resigns. See end of article for details.
According to a Securities and Exchange Commission (SEC) FORM 12b-25 on May 15, Shapeways disclosed its inability to timely file its Quarterly Report on Form 10-Q for the period ending March 31, 2024. The filing cited resource constraints and ongoing strategic evaluations.
The SEC filing highlights the company’s current operational challenges, stating, “Based on the Company’s current operations, in the absence of additional sources of liquidity or the consummation of a strategic transaction in the near term, management anticipates that the Company’s existing cash and cash equivalents and anticipated cash flows from operations will not be sufficient to meet the Company’s operating and liquidity needs for a meaningful period of time after the date of this Form 12b-25. In the event the Company determines that additional sources of liquidity will not be available to it or will not allow it to meet its obligations as they become due, the Company may need to file for bankruptcy protection in order to implement a plan of reorganization, or court-supervised sale and/or liquidation of the Company.”
This SEC filing underscores Shapeways’ precarious financial position, emphasizing its reliance on securing additional liquidity or a strategic resolution to sustain operations. Failure to secure these resources could necessitate bankruptcy protection, potentially leading to reorganization or liquidation.
Recent activity on LinkedIn has also revealed that several software engineers previously employed by Shapeways have been actively seeking new career opportunities since the beginning of this month. Concurrently, customers have voiced concerns about the company’s services on the networking platform.
The rescue bid is the culmination of a lengthy negotiation process beginning at least one year ago, according to a person familiar with the deal. Reportedly the efforts were led by 3DC Ltd., a UK based 3D printing service provider which was itself purchased by file sharing platform, MyMiniFactory in 2022. The value of the offer was based upon figures previously provided by Shapeways, it is currently unclear why the deal was rejected.
Shapeways’ CEO and CFO have been approached for comments on these developments.
Financial turmoil post-SPAC deal
Shapeways went public in 2021 via a merger with Special Purpose Acquisition Company (SPAC) Galileo Acquisition Corp (GLEO), valuing the company at $605 million after generating $195 million in net proceeds. Optimistic projections of 95% annual growth from FY 2021 to FY 2022, aiming for $150 million in FY 2023 revenue and $250 million by FY 2024, have starkly contrasted with reality.
Moreover, financial disclosures revealed Shapeways’ Q3 2023 revenue of just $8.4 million, gross profit of $3.4 million, and a staggering net loss of $19.4 million, signaling a 198.5% increase from Q3 2022. These figures represent a significant shortfall from anticipated revenues, now revised to $34.3-$35 million for FY 2023, which were down 76.7% from initial projections. Additionally, the company’s share price plummeted from $83.60 per share in January 2021 to $1.94 by February 2024.
Strategic actions amid financial distress
Amid these challenges, Shapeways pursued strategic alternatives to bolster its financial position. This April, Shapeways announced an online auction of Desktop Metal’s hardware valued at $5 million.
Hosted by Heritage Global Partners (HGP) on February 26-27, this auction followed an earlier $4 million auction in October 2023. This auction included Desktop Metal P1 Production System 3D printers, Shop System binder jet 3D printers, BMD 3D printers, and various supporting hardware.
To curb expenses, Shapeways initiated a cost-reduction initiative, reducing its workforce by 24% in October 2023, alongside cuts in new hires and non-critical expenditures, aiming for $6.2 million in annual savings. The company expects one-time charges of approximately $0.45 million for severance and benefits, primarily in Q4 2023. Additionally, on December 20, 2023, Shapeways granted stock options under its 2022 New Employee Equity Incentive Plan.
Shapeways’ current financial turmoil underscores the clear divergence between its ambitious growth projections and actual performance post-SPAC deal. With bankruptcy in the picture, the company faces a pivotal moment in its trajectory, navigating challenges to secure its future amidst operational and liquidity constraints.
UPDATE: Since the publication of the above article, Shapeways has confirmed the bankruptcy news. A post from the company’s Eindhoven Area plant manager reads,
“Earlier this week, I had to deliver the difficult news of Shapeways’ upcoming bankruptcy filing to our dedicated team. This was a somber moment in my nearly 12-year journey with Shapeways, where I have cherished the people, the challenges, and the opportunities to scale emerging technology into a mature fulfillment service for a diverse and demanding industry. In these years we were able to scale Eindhoven production to a highly efficient production facility with deep domain expertise on SLS, MJF, SLA, MBJ, MJP. We celebrated successes locally to the very end and had an extremely economical facility with high margins producing a significant turnover.
While we were aware of some of Shapeways’ struggles, the bankruptcy news was a shock to everyone. Seeing the surprise and disbelief on the faces of my colleagues was truly heartbreaking. Yet, in this dark moment, the team’s response was nothing short of inspiring. Their solidarity shone brightly as team members, even those off duty, came in to spend time together and ensure our facility was left in its best state.
This moment of unity is a testament to the incredible progress we’ve made over the years. We set our own direction, focusing on becoming a strategic partner to our customers through quality management (ISO 9001, IATF 16949, and ISO 14001), value-added services, assemblies, design services, and competitive pricing driven by deep domain expertise and economies of scale in 3DP/AM.
Our successes in Eindhoven wouldn’t have been possible without the support of our partners: EOS, 3D Systems, Stratasys, Relay, Rosler, and AM Flow. Thank you for your support over the years enabling us to innovate the Eindhoven facility to its current state!
Confident about the sound operation and supported by a unified team we are gearing up to restart the business on our own account. Please reach out for any business opportunities if relevant!“
UPDATE 2: New form 8-K filing with the SEC.
A regulatory filing by Shapeways with the SEC reads, “On July 2, 2024, after considering all strategic alternatives, Shapeways Holdings, Inc. (the “Company”) ceased operations and filed a voluntary petition for relief (the “Bankruptcy Filing”) under the provisions of Chapter 7 of Title 11 of the United States Code, 11 U.S.C. §101 et seq. (the “Bankruptcy Code”). The Bankruptcy Filing was filed in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). Each of the Company’s subsidiaries also ceased operations and filed voluntary petitions for bankruptcy relief.”
The notice continues, and sheds light on the event which caused bankruptcy procedures to commence, “Events of Default under certain of the Company’s outstanding debt instruments, including the $669,500 secured promissory note dated June 10, 2024, entered into with 3DP Custom Manufacture, LLC as lender, which results in acceleration of the Company’s obligations under such instruments.”
The executive team Greg Kress, chief executive officer, Alberto Recchi, chief financial officer, and Andy Nied, chief operating officer, give notice they have resigned as executive officers of the Company.
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Featured image shows a Shapeways sign from inside its New York warehouse.
